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The Final and Most Effective Steps in Market Research
Let’s start this post off with a quick pop quiz. Do you remember any of the following products?
- Colgate (as in the toothpaste) Frozen Entrees
- Starbucks Mazagran
- Celery Jello
- Crystal Pepsi
- The Apple Newton
No? That’s probably because each one of these products failed massively due to poor market research.
In the event you have heard of any of these products, it’s likely because you came across one of them as examples of poor market research in your MBA coursework, and not because you have actually purchased one of these products.
Entrepreneurs in every industry introduce products to the market on a continual basis, but the key to success lies in conducting thorough customer-driven research. It’s also interesting to note that, according to Fast Company, 75 percent of venture-backed startups fail. CBN Insights conducted a survey to understand this phenomenon and, based on the data, came up with a list of 20 reasons why startups fail. It won’t come as a surprise that several of these reasons are because of a lack of poor market research of the business including:
- No market need (42%)
- Get outcompeted (19%)
- Pricing/cost issues (18%)
- User unfriendly product (17%)
- Poor marketing (14%)
- Ignore customers (14%)
- Product mistimed (13%)
- And more!
To make sure you don’t run the risk of introducing a product bound to fail (e.g., Celery Jello), this post will walk you through the most effective steps to take in your market research process and how to gather both primary and secondary data. Let’s get started!
1. Identify your market
Before you start developing any products, it’s important to identify your market. If you skip this step, you’ll run into problems throughout the rest of the process.
Start identifying your market by looking at your current customer base. If you don’t have a current customer base, you can look at the customer base of your top competitors. Once you have reviewed your and your competitor’s customer base, use data collection, extraction, and analysis tools to glean top demographic, behavioral, and geographical data. Once you have this information, create a target customer profile.
Identifying your target market will help you with market and marketing research.
2. Learn about your target market
Once you know who your target customers are, take the time to get to know them. In other words, delve deeper to get a better understanding of what they like.
This can include gathering preference and behavioral data. This type of data will tell you what your target customers typically like, what type of purchases they have made in the past, and even the kind of feedback they have offered on similar products.
This data will help you guide you as you develop, refine, and work to differentiate your products and services.
3. Identify pain points of your target customer
Creating a customer profile, rooted in data, and then learning more about your customer profile is just half the battle. The other half is finding out what pain points your target customers are experiencing to thoroughly understand your research problem.
For example, you may find out that your target market consists of mainly millennials and Gen-Z buyers who love to communicate via social media, eat healthy foods on the fly, and subscribe to popular music services. However, creating a Snapchat duplicate, a generic c-store, or a Spotify rip-off won’t get you far. Why? Because those needs are already fulfilled by awesome services, products, and stores.
Instead, you’ll need to determine what current pain points your target customers are experiencing and work from there with differentiation in mind.
4. Develop a research design
Once you know what the top pain points for your potential customers in your industry are, it’s time to develop a research plan through various research techniques.
Your research plan will detail all of the necessary steps of how to get the information you need. Your research plan will include all of the following:
- Defining the challenge. This may include gathering insight from your target customer base by the means of qualitative research, such as interviews, focus groups, online community, or quantitative methodologies, such as surveys. The purpose of this preliminary research will help you determine exactly what your target customer needs are, what issues they have, and what types of survey questions you need to ask moving forward.
- Craft your survey/interview questions. You officially know the challenges of your target customer and the gaps in the market that your competitors are not filling. Congratulations. Now it’s time for some more in-depth customer feedback about what products/services they would want to buy and which they wouldn’t. You can gather this by crafting a survey with questions that are relevant to your objectives.
- Plan for survey distribution/conducting of interviews. Once you have an airtight survey, you need a plan for distribution. In other words, you need to make sure you get the survey in the hands of the right people, at the right time. This will help ensure you get proper feedback from the people that will actually be engaging with your brand in the future.
- Developing your research plan is the most important part of the market research process. It’s important to make sure your goals are on target, your challenges are clearly defined, your survey questions hit the mark, and that you have a smart plan for gathering data. That’s why it’s vital to review every step of the research plan process. This will ensure your research questions will yield the right data and that you are collecting data from the right people.
Once your research plan is airtight, it’s time to roll out your plan.
5. Collect the data
After you have put together your market research method, it’s time to distribute your survey, conduct your interviews, roll out your online community, etc. To make sure you get accurate results, here are some top things to consider:
- Sample size. Of course, you can’t get feedback from every person that fits your customer profile. That’s unrealistic. However, you do want to get enough feedback to represent a robust and diverse population. That sample depends on the size of your company, the number of groups and subgroups you have, and more. Shoot for an adequate percentage and a representative cross-section of your customer base.
- Choose a distribution method. Consider how you will distribute your survey and/or collect your data. This could include using survey software, distributing via email, social media, direct mail, or even by telephone. The distribution method you select will depend on the demographics of your target market. For example, if you are marketing to octogenarians, give them a call, rather than trying to catch them on social media.
- Hit go. Once you have determined your sample size and selected a distribution method, it’s time to start your study. Go for it with gusto and watch the results pour in.
6. Analyze the data and present results
Congratulations! You have gathered your results. Now, it’s time to learn what the data says. You may be a math whiz, but trying to interpret the data all on your own will result in human error. Instead, opt for a software that will do the hard work for you.
There are several options for data analysis tools, and the best news is most data distribution tools also come with analysis tools.
Once the numbers have been crunched, pull together a report and show it to your product development and marketing teams. With smart data visualizations, rooted in customer feedback, you’ll be able to quickly identify the most important insights that will help you craft a product, service, and company the market wants.
There you have it! The six most effective steps in market research. No matter how good you think your idea is or how much you think Pepsi drinkers want a water-looking cola, don’t skip the market research process. Market research will give you real insights into what your customers need and want from your company.